Ahospital pharmacy need their inventory properly manageable it will hwlp student to understand how a hospital manage their inventory.

1. INVENTORY MANAGEMENT

2. Presented by:
1. MD. Toukir Ahamed Tanvir ; ID: 1320245046
2. A.N.M Nasim Mostakim ; ID: 1321233046
3. Mahbuba Yesmin Eva ; ID: 1231207646
4. Farhana Jesmin ; ID: 1130620046

3. Outline
• Elements of Inventory Management
• Inventory and Supply Chain Management
• Inventory Control Systems
• Economic Order Quantity Models
• Reorder Point
• Classification of Inventories: ABC, VED

5. Types of Inventories
• Raw materials:
• Purchased parts and supplies
• Finished Goods
• Work-in-process (partially completed products )
• Items being transported
• Tools and equipment

6. Nature of Inventories
• Raw Materials – Basic inputs that are
converted into finished product through
the manufacturing process.

7. Nature of Inventories
• Finished Goods – Completely
manufactured products ready for
sale.

8. Inventory and Supply Chain Management
• Bullwhip effect: i) demand information is distorted as it moves away from
the end-use customer(forecast). ii) higher safety stock inventories are stored
to compensate.
• Seasonal or cyclical demand: for an example antiulcer drugs in Ramadan
• Take advantage of price discounts
• WIP inventories: goods in process, or in-process inventory are a company's
partially finished goods waiting for completion and eventual sale or the value
of these items.

9. Two Forms of Demand
Dependent
• Demand for items used to produce
final products
Ex: Raw materials are stored in the
hospital pharmacy for making
demand medication.
Independent
• Demand for items used by external
customers.
Ex: Medicine from different
companies are stored for filling the
prescription.

10. Inventory and Quality Management
• Customers usually
perceive quality service
as availability of goods
when they want them

11. Inventory and Quality Management
• Inventory must be
sufficient to provide
high quality customer
services.

12. Inventory Costs
• Carrying cost: cost of holding an item
in inventory.
• Ordering cost: cost of replenishing
inventory.
• Shortage cost: temporary or permanent
loss of sales when demand cannot be
met.

13. Inventory Control Systems
• Continuous system(fixed-order-quantity): constant
amount ordered when inventory declines to
predetermined level.
• Periodic system(fixed-time-period): order placed for
variable amount after fixed passage of time.

14. Economic Order Quantity (EOQ) Models
EOQ: We want to determine the optimal number of
units to order so that we minimize the total cost associated
with the purchase, delivery and storage of the product.

16. Inventory Order Cycle

17. EOQ Cost Model

18. EOQ Cost Model

19. EOQ Cost Model (cont.)

20. Reorder Point
Level of inventory at which a new order is placed.
R = dL

21. Variable Demand with a Reorder Point

22. Reorder Point with a Safety Stock

23. Classifying Inventory Items
ABC Classification (Pareto Principle)
• In any Retail organization there are large numbers of inventories
to be maintained. It is not practical to have very stringent
inventory control system for each & every item. So with the
modus of having an effective Purchase & stores control we
implement ABC Inventory.
• Classification model Known as Always Better Control (ABC)
based upon Pareto rule ( 80/20 rule).

24. ABC Analysis
• Divides inventory into three classes based on Consumption Value.
Consumption Value = (Unit price of an item) (No. of units consumed per annum)
Class A - High Consumption Value
Class B - Medium Consumption Value
Class C - Low Consumption Value

25. ABC Analysis

26. ABC Analysis

27. ABC Analysis

28. Inventory Management Policy
• A Items: very tight control, complete and accurate records, frequent review
via EOQ model.
• B Items: less tightly controlled, good records, regular review.
• C Items: simplest controls possible, minimal records, large inventories,
periodic review and reorder.

29. Inventory Management Policy
• Some time with the view of doing Lean inventory management: Within
ABC category VED ( Vital , essential & desirable factor) is introduced with
the view of further having effective control of inventory on the basis if its
being critical.
V (Vital) is the inventory where neither Substitute nor Variation Gap is
allowed .
E (Essential) is the inventory which allows either of the one to be changed
D (Desirable ) is the one which can have variation in both of the parameters

30. References:
• Cox, James F., III, and John H. Blackstone, Jr. APICS Dictionary. 9th ed. Falls
Church VA: American Production and Inventory Control Society, 1998.
• Anupindi, Ravi, et al. Managing Business Process Flows: Principles of Operations
Management. 2nd ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2004.
• Meredith, Jack R., and Scott M. Shafer. Operations Management for MBAs. 2nd
ed. New York: John Wiley & Sons Inc., 2002.
• Stevenson, William J. Production/Operations Management. 8th ed. Boston:
Irwin/McGraw-Hill, 2005.